By Mary Lauran Hall, AmericaSpeaks

Several individuals and organizations have proposed ways that the United States could alter existing policies to reduce long-term national debt. Because there are many conflicting views about how to reduce the deficit, it can be difficult to keep all of the proposals straight.

Below is a list of the most widely discussed debt reduction plans that have been released since the AmericaSpeaks: Our Budget, Our Economy national discussion. We encourage you to review the plans yourself and discuss the many options for debt reduction with family and friends.

Fiscal Commission Co-Chairs’ draft proposal

On November 10, 2010, Erskine Bowles and Alan Simpson, the co-chairs of the President’s bipartisan National Commission on Fiscal Responsibility and Reform, released a report detailing their priorities for deficit reduction. Note that this is not the Commission’s actual report–which will be released on December 1–but rather a draft proposal from the two co-chairs, inviting their own commission to think boldly and abandon partisanship.

The Bowles-Simpson plan was met with mixed praise and criticism from the left and right. As the first concrete set of recommendations released by anyone on the Fiscal Commission, the plan represents a first step towards the challenge of putting aside partisan concerns to seriously tackle the long-term deficit problem.

Several key priorities articulated by the public in the national discussion are reflected in this proposal, including cuts in defense spending, some cuts in health care with provisions to protect those who are most vulnerable, and raising the earnings cap on Social Security to 90%. On the other hand, this plan is missing other key recommendations from citizens, including raising tax rates for higher-income individuals and preserving major tax expenditures like mortgage deductions. For a more complete comparison between the draft proposal and the Our Budget, Our Economy results, see AmericaSpeaks president Carolyn Lukensmeyer’s blog post on the issue.

Bipartisan Policy Center’s “Restoring America’s Future”

A bipartisan task force chaired by former Senate Budget Committee Chairman Pete Domenici and former White House Budget Director Alice Rivlin released the Bipartisan Policy Center’s debt reduction plan on November 17, 2010. Both Pete Domenici and Alice Rivlin have expressed ongoing dedication to finding bipartisan solutions for our growing debt problem.

Several members of this task force were involved in Our Budget, Our Economy. Domenici and Rivlin are both featured in the Federal Budget 101 video that served as background information for participants at the national discussion, and Rivlin attended the event in Philadelphia. Three members of the task force–Robert Bixby, Maya MacGuineas, and Marc H. Morial–were on the national discussion’s National Advisory Committee. Finally, task force member Joseph Minarik served as an “issue expert” at the Town Meeting in Philadelphia, floating from table to table to answer questions about budget issues as they arose in participants’ deliberations.

Like the Bowles-Simpson report, this plan proposes raising the earnings cap on Social Security to 90%, a measure supported by most participants in the national discussion. Many participants also expressed frustration with an overly complex tax code and wanted a simpler, fairer tax system, and the Domenici-Rivlin proposes steps towards simplifying taxes. However, the plan proposes restructuring tax brackets in a way that would lower individual rates for higher earners, whereas most in the national discussion supported increasing taxes for higher income brackets. Moreover, most participants opposed creation of a 5% value-added tax (VAT), and this plan suggests a VAT-like 6.5% national Debt Reduction Sales Tax.

Peterson-Pew Commission on Budget Reform’s “Back in the Black”

Rather than recommending specific modifications to spending or tax structures, the Peterson-Pew Commission on Budget Reform’s report recommends a series of reforms to the government’s budgeting process. This commission suggests that these policy changes will stabilize the debt at 60% of Gross Domestic Product (GDP) and lead to more transparent, responsible budgeting in the future.

Currently, the federal budget is produced through a series of incremental annual decisions. Policymakers do not work towards specific fiscal targets and therefore have little incentive to think about the long-term fiscal outlook when making budgeting decisions. Short-term thinking leads to long-term problems. Members of the Peterson-Pew Commission suggest a series of fiscal reforms to make the budgeting process more far-sighted, disciplined, and transparent. As a start, they recommend that Congress and the President sign a Sustainable Debt Act that would establish specific targets for debt reduction for the medium- and long-term, create new rules for enforcement, and specify when public debt would be considered stabilized. To meet these goals, the report recommends increased levels of transparency and oversight. For example, under the Commission’s recommended policy changes, the President would report to Congress at the end of each year with an update about the budget’s effects and progress towards fiscal goals.

Because participants in the AmericaSpeaks national discussion on debt and deficit reduction were asked to focus spending and revenue rather than budgeting policy, it is not appropriate to draw comparisons between this proposal and the Our Budget, Our Economy citizens’ plan.

Stay Tuned!

On December 1, President Obama’s Fiscal Commission will release their final recommendations for how Congress can work to reduce the deficit. To stay informed about how the collective priorities of Americans figure into this ongoing conversation about fiscal reform, be sure to check the “Learn” section of the AmericaSpeaks: Our Budget, Our Economy web site.